WTO

World Trade Organization

is the only international
organization dealing with
the global rules of trade between
nations.
Its main function is to ensure that
trade flows as
smoothly, predictably and freely
as possible
 The WTO
Location: Geneva, Switzerland
Established: 1 January 1995
Created by: Uruguay Round negotiations
(1986-94)
Membership: 153 countries (on 23 July
2008)
Budget: 189 million Swiss francs for 2009
Secretariat staff: 625
Head: Director-General, Pascal Lamy
 ASSURANCE:
The result is assurance: Consumers
and producers know that they can enjoy
secure
supplies and greater choice of the finished
products, components, raw materials and
services that they use. Producers and
exporters know that foreign markets will
remain
open to them.
 The result is also a more
prosperous, peaceful and
accountable economic world.
Decisions
in the WTO are typically taken by
consensus among all member
countries and they are
ratified by members’ parliaments.
By lowering trade barriers, the
WTO’s system also breaks
down other barriers between
peoples and nations.
 At the heart of the system –
known as the multilateral trading
system – are the WTO’s
agreements, negotiated and
signed by a large majority of the
world’s trading nations, and
ratified in their parliaments.
 These agreements are the legal
ground-rules for international
commerce. Essentially, they are
contracts, guaranteeing member
countries important trade
rights. They also bind governments
to keep their trade policies within
agreed limits to
everybody’s benefit.
The World Trade Organization came
into being in 1995. One of the
youngest of the
international organizations, the
WTO is the successor to the General
Agreement on Tariffs
and Trade (GATT) established in the
wake of the Second World War
The system was developed through a
series of trade negotiations, or
rounds, held under
GATT. The first rounds dealt mainly
with tariff reductions but later
negotiations included
other areas such as anti-dumping and
non-tariff measures. The last round –
the 1986-94
Uruguay Round – led to the WTO’s
creation.
 In 2000, new talks started on
agriculture and services. These
have now been incorporated
into a broader work programme,
the Doha Development Agenda
(DDA), launched at the
fourth WTO Ministerial Conference
in Doha, Qatar, in November 2001.
 The agenda adds negotiations and other
work on non-agricultural tariffs, trade and
environment, WTO rules such as anti-
dumping and subsidies, investment,
competition
policy, trade facilitation, transparency in
government procurement, intellectual
property,
and a range of issues raised by developing
countries as difficulties they face in
implementing the present WTO
agreements.
 How can you ensure that trade is
as fair as possible, and as free as is
practical? By
negotiating rules and abiding by
them.
The WTO’s rules – the agreements
– are the result of negotiations
between the members.
The current set were the outcome
of the 1986-94 Uruguay Round
negotiations which
included a major revision of the
original General Agreement on
Tariffs and Trade (GATT).
 The complete set runs to some
30,000 pages consisting of about
30 agreements and separate
commitments (called
schedules) made by individual
members in specific areas such as
lower customs duty rates
and services market-opening.
Through these agreements, WTO
members operate a non-
discriminatory trading system
that spells out their rights and
their obligations.
Each country receives guarantees that
its
exports will be treated fairly and
consistently in other countries’
markets. Each promises to
do the same for imports into its own
market. The system also gives
developing countries
some flexibility in implementing their
commitments.
 GOODS
It all began with trade in goods.
From 1947 to 1994, GATT was the
forum for negotiating
lower customs duty rates and
other trade barriers; the text of
the General Agreement spelt
out important rules, particularly
non-discrimination.
 SERVICES
Banks, insurance firms,
telecommunications companies,
tour operators, hotel chains and
transport companies looking to do
business abroad can now enjoy the
same principles of
freer and fairer trade that originally
only applied to trade in goods.
 INTELLECTUAL PROPERTY
The WTO’s Intellectual Property Agreement
amounts to rules for trade and investment in
ideas and creativity. The rules state how
copyrights, patents, trademarks, geographical
names used to identify products, industrial
designs, integrated circuit layout-designs and
undisclosed information such as trade secrets –
“intellectual property” – should be protected
when trade is involved.
 DISPUTE SETTLEMENT
The WTO’s procedure for resolving
trade quarrels under the Dispute
Settlement
Understanding is vital for enforcing the
rules and therefore for ensuring that
trade flows
smoothly. Countries bring disputes to
the WTO if they think their rights under
the
agreements are being infringed.
The system encourages countries to
settle their differences through
consultation. Failing
that, they can follow a carefully
mapped out, stage-by-stage
procedure that includes the
possibility of a ruling by a panel of
experts, and the chance to appeal
the ruling on legal
grounds.
 TRADE POLICY REVIEW
The Trade Policy Review
Mechanism’s purpose is to
improve transparency, to create a
greater understanding of the
policies that countries are
adopting, and to assess their
impact.
 DEVELOPING COUNTRIES
DEVELOPMENT AND TRADE
Over three-quarters of WTO
members are developing or least
developed countries.
 All WTO agreements contain special
provision for
them, including longer time periods to
implement agreements and
commitments, measures to increase their
trading opportunities,
provisions requiring all WTO members to
safeguard their trade
interests, and support to help them build
the infrastructure for WTO
work, handle disputes, and implement
technical standards.
The 2001 Ministerial Conference
in Doha set out tasks, including
negotiations, for a wide range of
issues concerning developing
countries. Some people call the
new negotiations the Doha
Development Round.
A WTO Committee on Trade and
Development, assisted by a Sub-
Committee on Least-Developed
Countries, looks at developing
countries’ special needs.
 Its responsibility includes
implementation of
the agreements, technical
cooperation, and the increased
participation of developing
countries in the global trading
system.
 TECHNICAL ASSISTANCE AND
TRAINING
The WTO organizes hundreds of
technical cooperation missions to
developing countries annually. It
holds on average three trade
policy
courses each year in Geneva for
government officials.
 The WTO has set up reference
centres in over 100 trade
ministries and regional
organizations in capitals of
developing and least-developed
countries.
 THE ORGANIZATION
FUNCTIONS
The WTO’s overriding objective is
to help trade flow smoothly,
freely, fairly and
predictably.
 It does this by:
?Administering trade agreements
? Acting as a forum for trade
negotiations
? Settling trade disputes
 􀁴 Reviewing national trade
􀁴 Assisting developing countries
in trade policy
issues, through technical
assistance and
training programmes
􀁴 Cooperating with other
international organizations
policies
 STRUCTURE
The WTO has 153 members,
accounting for over 97% of world
trade. Around 30
others are negotiating
membership.
Decisions are made by the entire
membership. This is typically by
consensus. A majority
vote is also possible but it has
never been used in the WTO, and
was extremely rare under
the WTO’s predecessor, the
General Agreement on Tariffs and
Trade (GATT).
The WTO’s top level decision-
making body is the Ministerial
Conference which meets at
least once every two years.
 Below this is the General Council
(normally ambassadors and heads
of delegation in
Geneva, but sometimes officials
sent from members’ capitals)
which meets several times a
year in the Geneva headquarters.
 SECRETARIAT
The WTO Secretariat, based in
Geneva, has around 625 staff and
is headed by a director general.
It does not have branch offices
outside Geneva.
 The Secretariat’s main duties are
to supply technical support for the
various councils and
committees and the ministerial
conferences, to provide technical
assistance for developing
countries, to analyze world trade,
and to explain WTO affairs to the
public and media.
 Global Business Environment
the 1990s saw air travel increase
by 7%per annum.
Europe, North America and Asia
were the biggest markets. but the
terrorists attacks in the US in
September 2001 rocked the
industry.
 Global airline industry suffered
losses of 10 billion ponds in 2001
after the attacks mainly because of
the concern over the issue of safty
in air travel.
 Understanding Globalization:
the emergence of a global market
(economist),celebration of
diversity or convergence of
preferences in lifestyle and social
values(sociologist),gradual erosion
of state sovereignty(political
scientist)
Globalization Is a Three
Dimensional Concept:
a phenomenon
a philosophy
and
a process
Global Business Environment & its
Components:
GBE can be defined as the
environment in different sovereign
countries , with factors exogenous
to the home environment of the
organization, influencing decision
making on resource use and
capabilities.
 Social Environments:
companies operating
internationally must understand
the social environment of the host
country they are operating
in(working in a foreign culture
etc…….)
Emphasis On The Individual Rather
Than The Group:
most western societies emphasize
individual performance while many
Asian countries like Japan , China
an d India emphasize group/team
performance.
 Japanese organizations depend
highly on the employees
socialization into the companies
culture.
Lifetime employment is the usual
practice in such societies.
 Religion and International
Business:
Islam believes in social justice.
Islam prohibits giving or receiving
interest on money.
Values , Attitudes and International
Business:
for eg ., in India Hindus regard the
cow as sacred. Therefore Mc
Donald's sells lamb instead of beef
hamburgers in India
 Customs and Manners and
International Business:
in the US orange juice is
considered a breakfast drink but in
France , it has to be marketed as a
refreshing drink.
 Language:
companies should be careful when
translating advertising and other
communication messages eg.. Ford
motors FIERA TRUCK did not sell
well in Spain because it meant
“ugly old woman” in Spanish.
 Political environment:
foreign companies face political
constraints like tax programs,
pollution laws, pricing policies etc
aiming at protecting the
consumers and the local industry .
 Economic Environment:
the economic environment in the
host country relates to all the
factors that contribute to a
company’s attractiveness for
foreign business like volume of
trade and FDI.